IDEAS home Printed from https://ideas.repec.org/p/csg/ajrcau/272.html
   My bibliography  Save this paper

Japanese Foreign Direct Investment in Real Estate 1985-1994

Author

Listed:
  • Roger Farrell

Abstract

This paper explores the political economy of Japanese real estate foreign direct investment between 1985 and 1994. In this period there was a remarkable rise and decline in Japanese real estate investment abroad. The experience was important, not only because of the sharp growth in the share of real estate FDI in Japan’s overall FDI in these years, but because real estate investment became a focal point of international tension between Japan and other countries which absorbed it. To understand both the speed of the advance and retreat of Japanese FDI and its impact on host economies and communities, it is necessary to explain its principal causes. There are two main explanations of foreign direct investment in the economic literature on the theory of foreign investment. One derives from the traditional industrial organisation theories of FDI, which explain direct investment in terms of the specific advantages and characteristics of investor firms. This type of investment promises investor control over assets and an active managerial role and is associated with the strategic international expansion of firms, based on their specific advantages over local firms (Dunning1981). These condexplains capital flows as a response to the differing yields on investment associated with variations in financial conditions across countries, developments in foreign exchange markets and regulations affecting capital flows. This type of investment occurs without significant investor control over assets held abroad(Hymer1960). The paper argues that, for the most part, Japanese real estate investment was of the latter type and that the organisational and corporate strengths of investment firms explain little of the timing or impact of Japanese real estate FDI, in the 1980s. A wide range of Japanese investors, without specific capabilities or expertise in international real estate markets, participated in the often speculative acquisition and development of foreign office, hotel and other properties. This conclusion is critical to understanding, not only why Japanese real estate investment emerged and retreated so rapidly, but also why host countries responded to this experience in the way in which they did.

Suggested Citation

  • Roger Farrell, 1997. "Japanese Foreign Direct Investment in Real Estate 1985-1994," Asia Pacific Economic Papers 272, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:csg:ajrcau:272
    as

    Download full text from publisher

    File URL: https://crawford.anu.edu.au/pdf/pep/pep-272.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roger Farrell, 2000. "Japanese Foreign Direct Investment in the World Economy 1951-1997," Asia Pacific Economic Papers 299, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    2. Peter Drysdale & Roger Farrell, 1999. "Perspectives on Japanese Investment, Employment and Management in Australia," Asia Pacific Economic Papers 290, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.

    More about this item

    JEL classification:

    • F30 - International Economics - - International Finance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:csg:ajrcau:272. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Akira Kinefuchi). General contact details of provider: http://edirc.repec.org/data/ajrccau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.